The UK Innovation Report 2022

Introduction and Overview

The aim of the UK Innovation Report is to facilitate policy discussions on innovation and industrial performance – and the interplay between them. The 2022 edition of the report is published amid a changing policy landscape.

In March 2021 the UK government released a new strategy, Build Back Better: our plan for growth, which replaces the 2017 Industrial Strategy and sets out the government’s plan to address the “invented in Britain”/“made elsewhere” disconnect. A new Innovation Strategy published in July 2021 sets out a “long-term plan for delivering innovation-led growth”, announcing a commitment to increase annual public investment on R&D to £22 billion. The government has also established a new Office for Science and Technology Strategy and a National Science and Technology Council. In February 2022 the first chief executive of the new Advanced Research and Invention Agency (ARIA), modelled after the US Advanced Research Projects Agency (ARPA), was appointed.

The UK Innovation Report 2022 maintains last year’s four core sections (structure and performance of the UK economy, investment in innovation, industrial performance and science and engineering workforce) and incorporates a new one (net-zero innovation). It not only provides updates using newly available data but also seeks to address policy questions from different angles. The report uses new indicators and longer time series, integrates additional national and international databases, and analyses more granular data at industry and firm level.

Section 1 provides new decompositions of productivity growth rates and international productivity comparisons at sector level, building on a related project being conducted by the Policy Links Unit in collaboration with the National Institute of Economic and Social Research. Section 2 presents firm-level data on R&D investment and patent applications. Section 3 deep-dives into the pharmaceutical and automotive manufacturing sectors, incorporating insights gathered during consultations with industry experts from the public and private sectors from around twenty different organisations. Section 4 places additional emphasis on science, technology, engineering and mathematics (STEM) disciplines and technical education. Finally, Section 5 incorporates data on innovation and the economic performance of low-carbon and renewable-energy sectors.

New section in this edition: Net zero innovation

For many, the greatest challenge of the 21st century is climate change. Net zero refers to achieving a balance between the carbon emitted into the atmosphere and the carbon removed from it. Markets for new technologies that can help businesses and countries to achieve net zero are expanding, and therefore they are a key area in which innovative activity has the potential to contribute to national economic growth and competitive advantage. Our 2022 report has chosen net-zero innovation as a topic in focus, to highlight how the UK is performing in what has the potential to be a high-growth economic sector.